Overview:
On June 14, 2019, Hexaware Technologies, an IT services firm owned by Baring Private Equity Asia, announced that it has acquired US based digital services firm Mobiquity for $182m in an all cash deal. No mandatory regulatory approval was required for this acquisition.
This is the largest ever investments by Hexaware and the combined entity would compete with other large digital agencies and consulting firms.
Commenting on the transaction, Srikrishna, CEO, Hexaware Technologies, said, “The acquisition of Mobiquity fits in perfectly into our three-pronged strategy of adopting automation, cloud and customer experience transformation. While our capabilities are already quite evolved in the areas of automation, the new acquisition will help us augment our capabilities in cloud and customer experience transformation.”
About Mobiquity:
Founded in 2010, Mobiquity has c.457 employees and is headquartered in Waltham, US with global presence across three continents - US, Europe and Asia.
Mobiquity has large global enterprises like Rabobank, Philips, Wawa, Backbase and Otsuka as its clients for which it builds digital products. It provides consulting services on creating a seamless multi-channel digital experiences for their customers leveraging cloud technologies.
Transaction overview:
The transaction which values Mobiquity at $182m – represents a sales multiple of c.2.6x based on its revenue for FY18. The transaction will involve an upfront payment of $131mn and deferred pay out of $51m, part of which is contingent on earnouts.
Hexaware is taking a loan $20m to fund the acquisition. Transaction is expected to increase its revenue by 10% for H2 2019 as compared to what its revenue would have been from organic growth. On a GAAP basis, excluding the cost of transaction the deal is expected to be EPS neutral whereas on a Non-GAAP basis it would add 10% to EPS on an ongoing basis.
As a part of the transaction, Mobiquity’s leadership and teams led by its Chief Executive Officer (CEO) John Castleman, will continue to lead teams without any change to the organization structure of the company.
The acquisition will help Hexaware compete for large digital transformation deals by helping it build up requisite scale and capabilities. Also, Mobiquity’s revenue primarily comes from these two sectors – pharma and retail. By acquiring Mobiquity, Hexaware plans to acquire majority of Mobiquity’s top 20 clients. This will help Hexaware grow its business by strengthening its offerings in pharma and retail.